An economic theory claims that a rise in gasoline prices will cause gasoline purchases to fall, Ceteris paribus. The phrase "Ceteris paribus" means that:
A) other relevant factors like consumer incomes must be held constant.
B) the gasoline prices must first be adjusted for inflation.
C) the theory is widely accepted but cannot be accurately tested.
D) consumers' need for gasoline remains the same regardless of the price.

Question

Quizplus · Accepted Answer

Ceteris paribus means that all other relevant factors must be held constant. In this case, the economic theory assumes that only the gasoline prices are changing, while other factors, such as consumer incomes, remain unchanged.

An Economic Theory Claims That a Rise in Gasoline Prices